Landmark regulation case heading for appeal

There was a huge reaction from the local finance industry when three senior figures from Artemis Trustees were successful in overturning directorship bans and reducing the fines levied against them in April.

Lt Bailiff Hazel Marshall, who heard the case, refused the commission leave to appeal in June, but it took its case further, to Helen Mountfield, sitting as a single judge in the Guernsey Court of Appeal.

She has granted leave to appeal in a case which will continue to be watched by industry, saying that there will be a public interest case in many of the issues raised by the commission.

An argument was raised on behalf of the Artemis directors that the application for leave to appeal was out of time, which Ms Mountfield ruled against.

‘The public interest in those issues being determined outweighs the public interest in ensuring proceedings are brought promptly,’ she said.

The commission appealed the ruling on four main grounds – an ‘improper approach’ from Mrs Marshall, her ‘misapplication’ of the Guernsey anti-money laundering regime, an error in law as to findings on probity and prohibition orders, and in her approach to the assessment of financial penalties. It had said that some of the reasoning and interpretation of the law contained in Mrs Marshall’s judgment did not align with its understanding of its statutory duties and powers.

Ms Mountfield rejected any idea that Mrs Marshall pre-determined the appeal.

‘It is unarguable that she acted, or indeed that she would act, in anything other than an open and balanced way,’ she said.

But she allowed the appeal on the basis that the judge may have ‘given an over-broad interpretation on the scope of her jurisdiction’.

‘This is an important question of law in the context of a regulatory regime affecting a large number of licensed bodies in an important sector of the Guernsey economy.’

She applied a similar approach to the issue of penalties and the impact of breaches of anti-money laundering regulations and the other grounds of the appeal.

The GFSC imposed lengthy bans from holding senior officer roles in regulated firms and large fines on Ian Domaille, Ian Clarke and Margaret Hannis in July 2022.

They took the unusual step of not settling early for a 30% discount and then of appealing the sanctions in the Royal Court.

Part of their case was that there was no evidence that any of the matters they had been accused of had caused harm to anyone, nor to the Bailiwick’s reputation.

In part-allowing their appeals, Mrs Marshall also sent a warning shot to the commission about its approach to enforcement.

‘The commission is understandably fervent in the performance of its functions of protecting the public interest, and protecting and enhancing the reputation of the Bailiwick as a financial centre,’ she said.

‘However, it seems to me that on occasions, the commission may overlook the fact that the reputation of the Bailiwick as a financial centre includes the reputation of the commission itself as a regulator. In my judgment that reputation needs to be one of being “firm but fair” and the commission needs to keep in mind the danger that, in the interests of being perceived to be the former, it may overlook the latter.’

No date has been set for the appeal hearing.